2018 Index of Economic Freedom

Zimbabwe

overall score44.0
world rank174
Rule of Law

Property Rights27.6

Government Integrity18.9

Judicial Effectiveness33.0

Government Size

Government Spending72.0

Tax Burden61.1

Fiscal Health59.1

Regulatory Efficiency

Business Freedom37.1

Labor Freedom38.8

Monetary Freedom76.9

Open Markets

Trade Freedom69.1

Investment Freedom25.0

Financial Freedom10.0

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Quick Facts
  • Population:
    • 14.5 million
  • GDP (PPP):
    • $28.6 billion
    • 1.5% growth
    • 4.1% 5-year compound annual growth
    • $1,970 per capita
  • Unemployment:
    • 5.1%
  • Inflation (CPI):
    • -1.6%
  • FDI Inflow:
    • $319.4 million
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Zimbabwe’s economic freedom score is 44.0, making its economy the 174th freest in the 2018 Index. Its overall score has not changed, with significant improvements in scores for the trade freedom and judicial effectiveness indicators exactly offset by a plunge in fiscal health. Zimbabwe is ranked 44th among 47 countries in the Sub-Saharan Africa region, and its overall score is below the regional and world averages.

Zimbabwe’s economy is characterized by instability and volatility, both of which are hallmarks of excessive government interference and mismanagement. Massive corruption and disastrous economic policies have plunged the country into poverty. An inefficient judicial system and general lack of transparency severely exacerbate business costs and entrepreneurial risk. The government will likely adopt desperate short-term measures to stave off economic collapse, possibly including a unilateral de-dollarization that would reopen the door to hyperinflation, further crippling the private sector and severely undermining macroeconomic stability.

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Background

The former British colony of Rhodesia became the fully independent Zimbabwe in 1980. Long-time President Robert Mugabe of the Zimbabwe African National Union–Patriotic Front (ZANU–PF) was forced from office in November 2017 and replaced by former Vice President Emmerson Mnangagwa. The economy depends heavily on mining and agriculture, but political instability and protracted economic underperformance have caused a sharp rise in unemployment. The white population, which numbered almost 300,000 at the time of independence, has dwindled to fewer than 30,000.

Rule of LawView Methodology

Property Rights 27.6 Create a Graph using this measurement

Government Integrity 18.9 Create a Graph using this measurement

Judicial Effectiveness 33.0 Create a Graph using this measurement

Property rights are not respected. The government enforces interests in residential and commercial properties in cities, but this is not the case with agricultural land. Although the executive branch has exerted considerable pressure on the courts over the years, a recent series of rulings appears to reflect increasing judicial independence. Nevertheless, corruption remains a severe problem at every level of government.

Government SizeView Methodology

The top personal income tax rate is 51.5 percent, and the top corporate tax rate is 25 percent. Other taxes include value-added and capital gains taxes. The overall tax burden equals 24.8 percent of total domestic income. Over the past three years, government spending has amounted to 30.6 percent of total output (GDP), and budget deficits have averaged 4.3 percent of GDP. Public debt is equivalent to 75.3 percent of GDP.

Regulatory EfficiencyView Methodology

The government routinely expropriates land without compensation, and inconsistent application of “indigenization” and other regulations has severely discouraged business activity. Labor laws are extremely rigid. The government’s increasingly desperate short-term measures to address the country’s economic collapse include higher subsidies.

Open MarketsView Methodology

Trade is significant for Zimbabwe’s economy; the combined value of exports and imports equals 60 percent of GDP. The average applied tariff rate is 5.4 percent. Nontariff barriers significantly impede trade. Foreign ownership levels are capped, and sectoral restrictions impede foreign investment. Extensive state involvement in financial decisions and ongoing political instability have caused a notable contraction of the financial sector in recent years.

Country's Score Over Time

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Regional Ranking

rank country overall change
1Mauritius75.10.4
2Botswana69.9-0.2
3Rwanda69.11.5
4South Africa630.7
5Uganda621.1
6Côte d'Ivoire 62-1.0
7Seychelles61.6-0.2
8Burkina Faso600.4
9Cabo Verde603.1
10Tanzania59.91.3
11Namibia58.5-4.0
12Nigeria58.51.4
13Gabon58-0.6
14Mali57.6-1.0
15Guinea-Bissau56.90.8
16Madagascar56.8-0.6
17Benin56.7-2.5
18Comoros56.20.4
19Ghana56-0.2
20Swaziland55.9-5.2
21Senegal55.7-0.2
22Kenya54.71.2
23Zambia54.3-1.5
24Mauritania54-0.4
25Lesotho53.90.0
26São Tomé and Príncipe 53.6-1.8
27Ethiopia52.80.1
28The Gambia52.3-1.1
29Guinea52.24.6
30Democratic Republic of Congo52.1-4.3
31Malawi52-0.2
32Cameroon51.90.1
33Sierra Leone51.8-0.8
34Burundi50.9-2.3
35Liberia50.91.8
36Niger49.5-1.3
37Sudan49.40.6
38Chad49.30.3
39Central African Republic49.2-2.6
40Angola48.60.1
41Togo47.8-5.4
42Mozambique 46.3-3.6
43Djibouti45.1-1.6
44Zimbabwe440.0
45Equatorial Guinea42-3.0
46Eritrea41.7-0.5
47Republic of Congo 38.9-1.1
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